All of Valio’s profit goes to its milk producers
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Valio Group operations created income of around
1 billion euros for the Finnish economy.
Valio’s mission is to promote the business of Finnish milk producers. The company pays all the milk profit it generates to its owners, the Valio Group milk producers.
In 2010, Valio paid Valio Group dairy co-operatives 777 million euros for raw milk. Adding together Valio’s purchases of the commodities and services it requires, the purchases of milk producers in various parts of Finland, and Valio’s payroll and taxes, around 1.0 billion euros stays in Finland.
Valio Ltd is a company owned by 18 Finnish dairy co-operatives whose procurement share of Finnish raw milk is around 86%. Valio Group comprises 9 dairy co-operatives with around 9,000 milk producers, while the total number of milk producers in Finland is a little over 10,000.
Valio’s financial success is not measured in terms of profit but by the value added to the milk produced by the owners that have a business relationship with Valio, expressed as milk profit* which goes to Valio dairy farms in the form of the price paid for raw milk.
Valio pays a high price for raw milk by European standards. In 2010, Valio paid 40.9 euro cents per litre of raw milk, which is 0.5 cents higher than in 2009.
* Milk margin = Net sales less other costs excluding depreciation and the price paid for raw milk and interest on shareholder loan paid to owners.
**Milk profit = (Milk margin less the requirement for depreciation of fixed assets i.e. financing requirement for investments) / milk volume supplied by the owners.
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The Yli-Hynnilä dairy farm in Kuortane, Western Finland, is a textbook example of how bigger than average Finnish farms plan their expansion and enlarge their size.
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Antti, Merja and Jorma Yli-Hynnilä
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